Statistics indicate that increasing debt levels is a major threat to consumers’ well-being

Cape Town - Millions of South Africans are struggling to fight the ongoing battle of debt – a problem that has worsened over the last decade.

Given the current economic turbulence and its knock-on effects on the consumer – rising petrol prices and inflationary pressures – over-indebtedness will increasingly pose a significant threat to the financial well-being of South Africans.

This is according to Sebastien Alexanderson, Founder and Debt Counsellor at National Debt Advisors.

He pointed to statistics released by Veri Cred Credit Bureau (VCCB), which showed that debt still outstanding at the end of Q2, 2021 reached R2.077 trillion, and 717 495 people were under debt review.

The average South African is spending up to 75% of their disposable income on debt repayments – a 5% increase from the long-term average of 70%, as reported by the South African Reserve Bank.

The Household Debt to Income ratio in SA currently stands at 67%, and it is expected to reach 75.00 percent by the end of 2022, as per the Trading Economics global macro models and analysts’ expectations.

“What starts out as a small credit card payment, car finance, or store card can eventually lead to a debt-ridden war zone – often leaving you with little to no cash left for household expenses,” Alexanderson said.

He shared the below tips on how to break the debt trap:

Avoid using credit

One of the first signs that indicate that your debt situation is spiralling out of control is when you start feeling like you must rely on taking up more debt on a monthly basis just to make it through the month.

When this happens, it’s time to re-evaluate your living expenses and look at ways to live more frugally by not taking on any new debt.

Buy what you can afford, not what you can borrow

Start getting into the habit of saving

Not having a savings plan for emergencies often requires people to take out loans when the rainy days do come.

Cape Times